This blog has moved to http://kouk.surukle.me, leaving the following here for historical purposes.

Menu

Often one hears criticism of work places where employees practice long working hours without overtime. The rationale is that long work hours in themselves always mean profit to the employer, so unless the extra profit is shared with the employee (bonus, overtime, etc.) the employee would probably be better of without the long hours. And I agree 100% that in situations where your work is controlled by your employer you are better of sticking to the terms of your employment contract and not giving away hours of work for free without satisfactory compensation. But this begs the question of what “satisfactory compensation” is.

First “satisfactory” depends on your skill and experience relative to other employees. But let’s say for a minute that all employees in a profession are equivalent. Then, if we assume a constant supply of these same employees who are all getting payed a “satisfactory” wage then the employers can compete succesfully by making their employees more productive, ie. by getting them to produce more per hour than what they cost per hour. Usually this cannot be done by adding more hours on a workday, so indeed in this scenario the long working hour mentality is off the mark.

Another way to compete is to be more flexible than your competitors. This means both responding to client’s volatile demands but it also means being first to respond to changes in the labor market. But what if the supply of available employees changes, say universities produce double the amount of professionals this year than they produced last year? Then the employer can gain a competitive edge by using the opportunity to pay less for an equivalent employee-hour, assuming that new employees competition for work positions will lead them to accept lower wages. But if for some reason the official wage cannot be lowered (either because of market rigidities or because of minimum wage laws) then the employer could demand unpayed overtime instead which implicitly lowers the real hourly wage. For employers the flexibility is necessay

In practice however the employee doesn’t always know what his bargaining power is, ie. the minimum reduction (or maximum increase) of his salary, especially if he’s been working in the same place for a long time. But that is the price to pay for stability. Just as the employer will lose money or go out of business if he does not know what to pay for labor, so will the employee be unemployed or “exploited” if he doesn’t know what to ask for. But working long hours in itself is not always a sign of exploitation or the silly work-place mentalities. Long hours can also result from oversaturated demand for labor coupled with an inflexible labor market. Is this the case in your profession?